KfW Funding Program “Climate-Friendly New Construction”
You can apply starting March 1, 2023
Beginning March 1, 2023, the new KfW funding program “Climate-Friendly New Construction” will launch. In this Urbyo Update, you’ll find a quick overview of what the program supports, in what amounts, and how you can apply. More detailed information follows in the magazine article below. 🙌
Under this new program from the Kreditanstalt für Wiederaufbau (KfW), there will no longer be grants toward the purchase or construction of your property. Instead, you can secure more favorable conditions for your real estate financing. KfW offers two funding options: KFN Residential Buildings 297 and KFN Residential Buildings 298. We’ve summarized the key facts for you. And if you’d like to speak directly with our financing team, simply book an appointment for a nonbinding consultation.
- Goals
- What is subsidized?
- Who can apply?
- Funding limit
- Application
Goals of the KfW program “Climate-Friendly New Construction”
The program aims to make buying or building environmentally friendly properties more appealing and, in turn, reduce CO₂ emissions. At the same time, the German government wants to address the housing shortage—worsened by population growth and reduced construction activity due to inflation and rising building costs. A study by the Alliance for Social Housing found that by the end of 2022, Germany was short roughly 7,000 homes.
What does the new KfW program “Climate-Friendly New Construction” fund?
As the name suggests, the program supports climate-friendly new construction. However, you don’t necessarily have to build from scratch—there are also favorable loan conditions for the first-time purchase of climate-friendly properties.
To qualify, the property must meet the EH 40 energy standard. EH 40 stands for Efficiency House 40, meaning the building consumes only 40% of the energy used by a standard property. You can receive even more support if your property also earns the “Sustainable Building” quality seal. This requires the building to be comprehensively energy-efficient, using environmentally friendly construction materials and recyclable components.
Who is eligible for KfW 297 and 298?
If you’re planning to build or buy a property that meets all the criteria, it may be worthwhile to explore the “Climate-Friendly New Construction” program. Within the program, you can choose between two options. Which one fits you best depends on your situation, as they target different groups.
Who is KfW 297 for?
You can apply for KFN 297 if you …
… are a private individual who will live in the property yourself, or
… are part of a homeowners’ association (WEG) whose members will live in the property.
Who is KfW 298 for?
The list for KFN Residential Buildings 298 is much broader. The following individuals or groups can apply:
Private individuals who will not live in the property
Homeowners’ associations (WEGs) that do not occupy the property
Sole proprietors
Freelancers
Public corporations and institutions, such as chambers or associations
Nonprofit organizations, including churches
Companies, including municipal enterprises
Other legal entities under private law, including housing cooperatives
Participation in the “Climate-Friendly New Construction” program is not open to the federal government, the federal states, their institutions, or political parties.
Funding amounts in the KfW program “Climate-Friendly New Construction”
The amount of funding depends on the specific conditions. Unlike other programs, this one does not offer grants. Instead, you benefit from lower interest rates—which is especially attractive in times of rising interest levels.
If your property receives the “Sustainable Building” seal in addition to the EH 40 standard, you can obtain a loan of up to €150,000 per housing unit. If it meets only the EH 40 standard, the maximum is €100,000 per housing unit.
Interest rates are based on capital market trends but are reduced through federal subsidies. According to available information, you can save up to 4% compared to typical market rates. The applicable interest rate is either the rate on the approval date or the lower rate at the time the application is submitted. For loan terms that exceed the fixed-interest period, KfW will make an extension offer before the end of the term—though without further interest reductions. At that point, you can also choose to refinance elsewhere.
Applying for KfW 297 and 298
You cannot submit the application yourself. It must be submitted through banks, insurance companies, or other financing partners. But that’s no problem—our financing team is happy to support you and check whether the “Climate-Friendly New Construction” program makes sense for your situation and how you can use it for your property purchase or new-build project.
You can find more information about the program directly at KfW.
